PARIS: European equities mostly rebounded Tuesday after Wall Street gains, and on surprise news of buoyant business confidence in eurozone powerhouse Germany.
British stocks also rose after the government backed Heathrow Airport’s expansion, in a move, it said, would bring economic benefits worth up to £61 billion (69 billion euros, $75 billion).
London share prices added 0.4 percent, while in the eurozone, Frankfurt gained 0.3 percent and Paris nudged just 0.1 percent higher.
“European shares are trading little changed to moderately higher … on the back of firmer US markets last night and a better than expected German Ifo index,” said analyst Markus Huber at trading firm City of London Markets.
German business confidence defied predictions to climb to a new two-year high in October, the Ifo economic institute revealed.
The Munich institute’s headline business confidence index hit 110.5 points in October, up one point from the September reading of 109.5 and the highest level since April 2014.
In London, British Prime Minister Theresa May’s government approved a third runway at Heathrow Airport in a long-running row that had pitched environmental campaigners and local residents against the business community.
The administration said it would create 77,000 additional local jobs over the next 14 years.
Proposals to expand an existing runway at Heathrow or build a second runway at Gatwick airport were rejected.
“London businesses will welcome the decision by the government to add a new runway at Heathrow,” noted CMC Markets analyst Jasper Lawler.
“It will be a multi-year boom for the businesses that win contracts to build and serve a bigger Heathrow.”
ETX Capital trader Neil Wilson said the announcement was a “good signal” for businesses, but cautioned that it could take “a very long time” and added there were still concerns over who would foot the bill.
Banking woes rock Milan
On the downside in Europe, however, Milan stocks fell 0.4 percent on fresh turmoil in the Italian banking sector, after troubled lender Monte Paschi di Siena unveiled plans to axe 2,600 jobs and close 500 branches.
BMPS unveiled the overhaul as it posted a net loss of 1.15 billion euros ($1.3 billion) in the third quarter.
Italy’s third-biggest lender will also seek improvements of its loans and risk reduction.
“It is the kind of bitter pill the Italian banking sector as a whole better get used to taking if it wants to avoid being the biggest threat to the eurozone’s stability,” said Spreadex analyst Connor Campbell.
Wall Street had rallied Monday on another upbeat raft of corporate earnings and a provisional reading that showed activity in the US manufacturing sector expanded at a faster rate than expected.